Henderson’s Criticisms and Appreciations of John Kenneth Galbraith

I’ve been in a discussion on Facebook in the last few days on the topic of John Kenneth Galbraith. In the 1960s and early 1970s, the three economists that were most well-known were Galbraith on the left, Paul Samuelson on the center left, and Milton Friedman on the libertarian end.

The discussion was mainly about civility and about how Galbraith had some. It reminded me of something that happened shortly after Galbraith died. I remember getting an email, on a Sunday morning in April 2006, from Tunku Varadarajan, op/ed editor at the Wall Street Journal asking me if I “do” Galbraith. Galbraith had died the previous day. What Tunku was asking was whether I knew enough to write an op/ed on Galbraith. I said I did. I wrote it and it ran the next day, if I recall correctly.

I made no errors that I know of in the piece. I still like it. But in the process of researching my subject, I had found interesting nuggets in his autobiography, A Life in These Times, nuggets that I didn’t have space to discuss. So I started reading that book and some of his other work in my leisure time. After a month or two of reading, I contacted Sheldon Richman and asked him if I could write a longer piece for The Freeman, of which he was the editor at the time. Sheldon was surprised. “You want to write an appreciation of Galbraith?” he asked. I said that I did but that there would also be heavy elements of criticism. Sheldon knew my work, trusted me, and gave me the green light.

The result was David R. Henderson, “John Kenneth Galbraith: A Criticism and an Appreciation,” The Freeman, December 2006.

An excerpt:

Most free-market economists, including me, have had little use for the vast bulk of Galbraith’s writing and thinking. This is understandable, given that the main work by which he was judged, and by which he appeared to want to be judged, was weak, both theoretically and empirically. But a more-complete assessment of Galbraith’s writing leads me to conclude that we free marketers have been somewhat uncharitable to Galbraith. He had remarkable insights, especially about government bureaucracy and war, insights that would not have surprised a Ludwig von Mises, an F. A. Hayek, or a Robert Higgs. Moreover, in his opposition to war and his attempts to stop it, Galbraith showed some real courage.

A criticism:

Other mainstream economists, such as Scott Gordon and Robert Solow, also pointed out fundamental problems with his conclusions—problems Galbraith never seriously grappled with. Instead he focused on the witty epigram. As one critic pointed out, Galbraith’s main form of argument for key assumptions in his model of the economy was “vigorous assertion.” It’s not hard to see why. In his autobiography, A Life in Our Times, Galbraith wrote that he learned a deep skepticism about statistics from a Harvard colleague, statistician William L. Crum. Galbraith wrote: “In my adult life I have occasionally been criticized for inadequacy in statistical or econometric method. Crum is responsible; from him I early formed the impression that no figure and no calculation was really valid and that it was foolish to expose one’s self by citing one.”

What an incredible overconclusion. No figure or calculation was really valid? How would he know, except by presenting contrary figures or corrections in calculations? And if he judged the invalidity based on these contrary figures or calculations, wouldn’t he be accepting their validity? Indeed, Galbraith backed up his skepticism with a follow-up example: an incorrect data-based prediction of an Alf Landon landslide over Roosevelt in the 1936 presidential election. Of course, Roosevelt won, a fact that Galbraith acknowledges—which means that Galbraith must have trusted, within a certain margin, the actual data on presidential voting.

An appreciation:

What else is impressive about Galbraith?  He brought an independent mind to some of the biggest issues of the twentieth century, those involving war and peace. For all his refusal to look at evidence, Galbraith did some of his most important work on the effect of Allied bombing of Germany during World War II.  As a director of the U.S. Strategic Bombing Survey he went to Germany immediately after the European war and headed a team to do an overall economic assessment of the German mobilization and the effect of the bombing on that mobilization.  Galbraith’s team included economists Burton H. Klein, who made his reputation with his work on that team, Nicholas (later Lord) Kaldor, E.F. Schumacher (later author of Small Is Beautiful), Tibor Scitovsky, and Edward Dennison.

What they found was devastating.  Galbraith wrote wittily, “Nothing in World War II air operations was subject to such assault as open agricultural land.”   Successful attacks on war-production plants were much rarer.  Whereas in 1940, 1941, and 1942, average monthly production of Panzer vehicles was 136, 316, and 516, respectively, in 1943 (when the bombing had begun in earnest) and 1944, monthly Panzer production was up to 1,005 and 1,583, respectively.  They found similar results for airplane production.  Galbraith’s boss, George Ball (later undersecretary of state under Presidents Kennedy and Johnson), found something equally disturbing about the firebombing of cities.  The RAF’s bombing of central Hamburg, for example, destroyed many lives and many businesses in the central city—restaurants, cabarets, department stores, banks, and more.  What were the newly unemployed waiters, bank clerks, and entertainers to do?  That’s right: seek jobs in the war plants on the edge of the cities “to get the ration cards that the Nazis thoughtfully distributed to workers there.”

Moreover, the effect of the bombing was to shift control of production from the incompetent Goering and the Luftwaffe to the far-more-competent evil genius, Albert Speer.  In other words, the incredible destruction that the British and air forces wreaked on Germany, with the high loss of human life, didn’t even have the intended effect of slowing Germany ‘s war-production machine.  Galbraith had to fight hard to have his report published without it being rewritten to hide the essential points.  “I defended it,” he wrote, “with a maximum of arrogance and a minimum of tact.”

In my experience as a senior economist with President Reagan’s Council of Economic Advisers, I found tact to be strongly overrated.  To prevail, Galbraith probably needed about as little tact as he used.

And my little sadness:

Finally, I confess some sadness.  In November 1981 I was the warm-up speaker for Galbraith at an event held by the Chicago Council on Foreign Relations.  We had a short, friendly interaction, but I went into it knowing virtually nothing about Galbraith’s keen observations on war and peace.  How much different our conversation and my speech might have been had I paid Galbraith the respect that was his due.

Read the whole thing.